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Biotech / Medical : VVUS: VIVUS INC. (NASDAQ)

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To: Greg22 who wrote (18033)	1/22/1999 1:53:00 AM
From: VLAD	Read Replies (2) of 23519

Let's debate these projections a bit: We first need to look at last quarters figures which were: Domestic sales = $3.5M International sales = $14.6M Milestone = $2M Total Income = $20.1M R&D = $4.7M SG&A = $3.9M Cost of Goods Sold = 28.3M OK now domestic sales were about 10% lower than Q3 based on IMS numbers but since Vivus books income upon shipment we can actually even have domestic income that is higher than last quarter. Who knows? Being conservative, and considering slightly lower IMS numbers let's keep the Q4 domestic sales at $3.0M International sales are a guess so we need to make an educated guess. A lot of Q3 sales went towards filling the international pipeline. Vivus warned back in their last Q form that international sales would be lower. Maybe my $9M is too low but I think your $12M is too high. I'll remain conservative yet you convince me to increase it to $10M which is a 31% decrease from Q3 (I still feel that $10M is too high but I will keep it at this level). No milestones this quarter--too bad. So we have a total income in Q4 of $13M Now for expenses: Vivus claimed in their last Q form that both SG&A and R&D will be lower but they don't say how much lower. I believe your numbers are too low. I am going to keep my R&D to $3.5M(25% decrease) and SG&A at $3.0M(23% decrease) which totals $6.5M. Cost of goods sold. Last quarter not including the $16M write down we had a COG of $12.3M. This part I do not fully understand but consider that fewer units were shipped both domestically and internationally which would decrease COD by $1.3M which leaves us with $11M. Now consider that costs are decreased by elimination of PACO's higher costs and all production limited to the more efficient new factory including decreased lab costs with the new in house lab. Let's cut out another $2M for increased efficiencies which leaves us with COGs at $9M. Now the "tricky" part is trying to figure what part of last Q's raw material write off is going to be put towards Q4's COGs. I don't know but Vivus claimed that part of the raw aloprostidal that was written down was going to be placed into deep freeze and would be still good to be used at a later date. I believe they will use part of the written off raw materials in Q4's COD calculation. My guess is 1/4 of the $16M or $4M which results in an actual COD of $5M So we have $13M product revenue - $6.5M SG&A and R&D - $5M Cost of Goods = $1.5M net / 31.8M = + 0.047 or round up to .05 cents I'm sticking with 3 cents for Q4 1998 to be conservative as I know that they will show a profit over 2 cents and I will leave myself some room for error in estimating costs. I think we will see at least 3 cents income and at most 5 cents.

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